Budget 2018 impact: Govt volte-face on insurance merger surprises regulator

The ratio measures to what extent an insurance company has capital to meet claims from all the business it has covered

The government’s announcement in the Union Budget on Thursday to merge three state-owned general insurance companies — National Insurance, Oriental Insurance and United India Insurance — has caught the sector regulator Insurance Regulatory Development Authority of India (IRDAI) by surprise.

In the Budget for FY16, Finance Minister Arun Jaitley had announced plans to list the three companies on the bourses. Thursday’s announcement reverses the position.

The change in policy for the three companies, even as they were caught off guard, shows the level of discomfort within the government about their ability to take on the expanded load for insurance coverage